CHAPTER – 1

PROJECT AT A GLANCE

1. Name of the Unit and

Address : XXXXXXXXXXXXX

2. Constitution : Proprietorship

3. Name of the Promoter : XXXXXXXXXXXXXXXXXX

Address of Residence : XXXXXXXX
Contact No. : XXXXXXXXXXXXXX
E-mail ID : XXXXXXXXXXXXXX

4. Proposed Project : Installation of an automatic vibro hydraulic multipurpose

machine for production of cement concrete bricks, Hollow
Blocks and Interlocking Paver Blocks.

The promoter has applied for registration of the proposed

industry as SSI unit to the DICC, XXXXXXXX. NOC from
the concerned Gao Panchayat and Pollution Control
Board XXXXXXXX is being obtained.

The project in the manufacturing sector will be set up

under PMEGP & the promoter as beneficiary of the above
scheme wishes to avail 35% of project cost as subsidy, as
the location of the project being in rural as well as
hill/border areas. Further the promoter belongs to OBC
category and eligible for the graded benefits.
5. Plant capacity : Based on single working shift of 8 hours in a day & 300
working days in a year optimum production capacity of
plant is as under
(i) No. of bricks with frog (75mm) at the rate of 13440 nos.
per day & 150 days in the year = 20,16,000
(ii) No. of hollow bricks 1600mm x 400mm x 200m at the
rate of 1920 no. per day for 100 working days = 192000
nos.
(iii) No. of Interlocking Paver Blocks (single) 75mm size at
the rate of 5760 nos. per day & 50 working days per year
= 288000 nos.
It is proposed to work in a year 150 days for production of
bricks, 50 days for production of interlocking paver blocks
1
 & 100 days for production of hollow cement concrete
blocks.
6. Capacity Utilisation : Utilisation of optimum plant capacity is envisaged to be
obtained in first year of operation is anticipated at 60%
which will be improved to 70%, 80% & 90% in second
year, third year & fourth year of operation & onwards
respectively.
7. Requirement of Utilities : Power : 25 KW
Water : 10 KL / day
Employment : 19 persons
8. Requirement of Working Capital :
1st year : Rs. 6.83 lakhs
nd
2 year : Rs. 7.63 lakhs
rd
3 year : Rs. 8.54 lakhs
th
4 yr &onward : Rs. 9.44 lakhs
9. Capital cost of the project : Rs. 25.00 lakhs
Including margin money & working capital
10. Means of Financing Pattern :
i) Promoter’s Contribution (5% of project cost) : Rs. 1.25 lakhs
ii) Subsidy under PMEGP (35% of project cost) : Rs. 8.75 lakhs
iii) Term Loan from Bank/Financial Institution : Rs. 15.00 lakhs
Total : Rs. 25.00 lakhs

11. Annual sales turnover :

1st year : 1st year Rs. 172.20 lakhs

2nd year : 2nd year Rs. 200.90 lakhs

3rd year : 3rd year Rs. 229.60 lakhs

4th yr &onward : 4th year Rs. 258.30 lakhs

12. Annual Net Profit after interest & tax :

1st year : Rs. 0.59 lakhs

2nd year : Rs. 4.46 lakhs

3rd year : Rs. 8.22 lakhs

4th yr &onward : Rs. 11.60 lakhs

2
13. Important Financial Indicators :

Debt Equity Ratio : 1.5 : 1

Break Even Capacity : 66.40%

Pay Back Period : 2 years 6 months
Average Debt Service
Coverage Ratio : 4.31
Internal Rate of Return : 42%
.

3
 CHAPTER – 2

INTRODUCTION

2.01 Concrete bricks, pavers and hollow blocks are precast solid products. Bricks &
hollow blocks have an important place in modern building industry while precast
interlocking pavers, these days are used extensively in road construction in this part of
the country. Concrete bricks & blocks are effective & better alternative to burnt clay
bricks by virtue of their good durability, fire resistance, partial resistance to sound,
thermal insulation, small dead & high speed of construction. Concrete hollow blocks
being larger in size than normal clay building bricks less mortar is required and faster
construction is achieved. Also these types of bricks & blocks provides facility for
concealing electrical conduit, water & sewer pipes whenever so desired and requires
less plastering. Hence reduction in cost.
2.02 Bricks are one of the main stays of constructional activities and constitute about
15% of the cost of constructional materials. The gap in demand & supply of bricks is
envisaged to be considerable as there does not have any medium or large brick making
semi automatic & automatic plant in its neighbourhood so far. New industries are also not
coming up due to lack of motivation, investment capacity among the local entrepreneurs.
A new unit with automatic operation of brick & hollow blocks making using non traditional
materials available locally in a cost effective manner will go a long way to combat this
problem.
2.03 Condition of roads in this part of the country is generally very poor. At lot of facelift
is necessary to be given to roads, adjacent footpaths & road sides. Use of concrete
paver blocks is good for this job for their easy laying, better look & finishes and their
durability & cost effectiveness. So paver blocks, these days are used in the localities in
road construction and flooring in open areas of public offices, commercial building and
housing apartments. Further pavers cake be made in various shapes & sizes &
dimensions as per requirement of the customers (rectangular, square, round shape etc.)
2.04 The technology for construction of bricks, hollow blocks and pavers gives high
strength, precise size and light weight which are green building materials & perfect for
constructional activities.
Concrete brick & blocks gives high thermal and sound insulation because of
superior thermal insulation property of raw materials and good sound barrier materials. It
allows no water seepage from exterior to interior walls for absence of capillaries. These
are fire resistant, pest resistant & there does not have any chance of efflorescence.
From builders point of view, it is ease of working (lifting, drilling, cutting, chiseling,
rasping are easy & convenient & can be done with traditional tools). Other advantages
are faster construction, best finishing, less plastering which saves cost & increased
carpet area and reduces dead load resulting in saving of steel & concrete.
4
 From social benefits point of view use of more concrete bricks & blocks save
fertile land. Manufacturing is energy efficient and reduces carbon emission. Thus it
brings social & environmental benefits. Concrete brick & blocks have some of technical
parameters as under.
Dry density : 500 – 600 kg/M3
Compressive strength : 90 – 250 kg/cm2
Thermal conductivity : 0.16 to 0.18 W/KOM
Wet density : 800 – 850 kg
It saves 33% plastering mortar, 60% joining mortar, 10% wastage, 10% steel
materials (less deal load) & 1.5% carpet area. Construction time is reduced by about
25% compared to clay bricks.
2.05 Vibro-Hydraulic technology is adopted for making concrete bricks, blocks &
pavers. The same machine is used for making these products. Operation is carried out
under a shed & can be continued throughout the year unlike manufacturing of traditional
clay bricks & tiles in open & operations are to be suspended in rainy season which
continues for about 5 to 6 months in a year in this region.
2.06 The decision taken by the promoter to choose this project is based on many
factors such as –
Availability of basic raw materials like sand, cement & stone dust *undersize of
stone aggregates generated in stone crushing) etc. in abundance & good quality at
reasonable price making finished product cost effective.
Site topography, environmental regulations, sizable local market.
Scopes for expansion & diversification.
2.07 The promoter of the project is a highly technically qualified person having
professional experience of working in IT sector since several years in the country &
abroad (USA). He has intended to avail financial assistance in the form of subsidy under
PMEGP (Prime Minister’s Employment Generation Programme) which is a central
scheme administered by the Ministry of Micro, Small & Medium Enterprises for new
projects to be set up.
Proposed project is a new one in manufacturing sector. The location of the project
is in rural area (XXXXXXXX on XXXXXXXX Kathal road under GP & XXXXXXXX
Development Block in industrially backward district of XXXXXXXX, in the State of
XXXXXXXX). XXXXXXXX district is a hill & border district having international boundary
with Bangladesh is about 50 KM away from the proposed location. Further the promoter
of the project belongs to OBC category & beneficiary. Hence he is eligible for subsidy of
35% of project cost under the scheme and promoter’s contribution for the project is 5% of
project cost (capital expenditure and margin money of working capital). As per the

5
guidelines of scheme, the proposed project will have term loan from Bank/Financial
Institutions etc. to the extent of 95% of the project cost which will be disbursed fully for
setting up of the project. Subsidy amount when released by the Nodal Agency of the
scheme wil be routed through the lending bank & adjusted against the term loan
disbursed.
The promoter is also eligible for a host of recurring subsidies on power tariff,
captive power plant installation, stamp duty, working capital interest subsidy, GST
exemption etc. from XXXXXXXX Govt. as per their incentives offered to small & medium
industries.
2.08 The promoter of the project – XXXXXXXXXXXXXXXXXX after extensive inquiries
& consultation with the experts in the field has selected to purchase multipurpose vibro
hydraulically operated machine for this purpose. The machine is easy to operate with
high efficiency, equipped with inbuilt equipment and accessories and hs the flexibility to
utilise the same machine to produce fly ash bricks as well as other precast solid
materials like bricks, paver blocks, solid hollow concrete blocks etc.
2.09 Various moulds can be used for fitting to the mahal for making products of
different dimensions & different shapes. Maximum product density can achieved and
output is high with less labour strength compared to operations in traditional brick making
operations.
2.010 In view of market study of demand & supply requirement, locally and in adjoining
hill states and considering other relevant aspects relating to plant location vis-à-vis
infrastructural facilities available, output of products qualitatively and quantitatively, cost
and profitability projections of the proposed unit and other socio economic benefits.
Setting up of an automatic plant for production of bricks, pavers & hollow blocks with
locally available materials like sand, stone dust & cement is considered to be a techno
economically viable proposition. The same products can be made by this machine using
fly ash instead of stone dust but fly ash is to be bought from the sources outside the
state. An indepth analyais of various such factors is presented in the following chapters
for proper appraisal & evaluation of the project.

6
 CHAPTER – 3

PROMOTER

3.01 The project is being implemented in name & style of “H.D. CONCRETE
INDUSTRY” having its works and commercial office located at XXXXXXXX on
XXXXXXXX Kathal Road. The location is in rural area under Ambikapur Gao Panchayat
& XXXXXXXX Development Block in XXXXXXXX district of XXXXXXXX. XXXXXXXX
district in southern XXXXXXXX is a border district.
The proposed industrial unit in manufacturing sector is a new one & promoted by
an individual XXXXXXXXXXXXXXXXXX. Constitutionwise it would be a proprietorship
unit.

3.02 Brief bio data of the promoter is furnished as under.

XXXXXXXXXXXXXXXXXX

7
 CHAPTER – 4

MARKET REVIEW

4.01 Brick is one of the major constructional materials for construction of buildings,
bridges & other civil construction work. In terms of expenditure and labour deployment
construction industry is the single largest factor in the country’s economy.

Brick industry is one of the oldest industries in the country. Present production of
bricks in India is estimated at 110 billion nos. approximately. Production units have been
scattered over but majority of them make bricks manually using traditional materials like
clay. Drying of clay bricks is done in sunrays. Operation of brick kilns is suspended in
rainy season. Hence clay brick industries work 5 to 6 months only in a year in this part of
the country.

Current brick consumption in North Eastern States is 2500 million of which

XXXXXXXX consumes about 70% and consumption of XXXXXXXXdistricts being 12 –
13% is about 300 million in a year.

Total number of brick fields working in NE is 1190 of which XXXXXXXX accounts

for about 1035 brick fields with production capacity of 2200 million bricks which clearly
indicates a substantial gap in demand & supply. Consequently there has been a sharp
rise in price of bricks in last few years.

Quality of bricks from small brick fields is indifferent. Inferior grades are sold as
grade II & grade III etc. Because of use of coal in dust form for bricks production
environment pollution causing health hazard is always a matter of concern.

Due to boost of constructional activities in NE the demand for bricks is expected to

increase at the rate of 5% per annum. So it is necessary to install more brick production
units in the region.

4.02 Cement concrete hollow blocks are modern constructional materials and as such
used in residential, commercial and industrial building construction. Construction industry
is a growing sector. The demand for this product is always high in cities & other urban
centres due to construction of residential apartments, houses for different income groups
under Prime Minister Abash Yojana etc. & other commercial & industrial buildings.

Growing public awareness of the product coupled with increase in support of

Government & Financial Institutions for housing which is a basic necessity would ensure
a healthy growth in demand.

4.03 Interlocking cement concrete paver blocks now-a-days find applications in

construction of pavements, footpaths, flooring for gardens, passengers, waiting shed at

8
bus stands etc. In recent times cement concrete paver blocks of different shapes &
different dimensions have become very popular for their use mainly in construction of
roads in this part of the country. It is preferred over traditional bitumen road because of
their strength, durability and other advantages, particularly in places where rainfall is high
& water logging is frequently experienced due to poor drainage system.

4.04 To meet evergrowing demand of bricks, hollow blocks, paver blocks etc, the
scientists & engineers have explored alternative materials for making of these products
as per availability in the localities. Stone dust, sand, lime powder, cement, flyash etc.
have found use as alternative to clay have been found for use.

4.05 From statistics, as furnished above it is evident the XXXXXXXX& adjacent hill
states of Mizoram, Manipur, Tripura etc. has a sizeable market for concrete bricks,
blocks & pavers enjoying & lucrative price. The proposed industry would have installed
capacity of 20,16,000 no. concrete bricks, 2,88,000 no. paver blocks & 3,60,000 no.
hallow blocks working in single shift of 8 hours & 300 working days in a year (150 days of
working for bricks, 50 days of working for pavers & 100 days of working of concrete
hollow blocks). Above production figure constitutes only a small fraction of demand &
supply existing at present in the aforesaid market. Demand will however be much more
than the projected figures in view of anticipated closer of many clay bricks making units
because of nonavailability of clay deposits, pollution problem & shortage of manual
labour. Pace of construction activities is expected to be accelerated due to emphasis by
Government on infrastructure development like construction of roads, bridges, irrigation
projects, extension of railways etc.

4.06 Regarding marketing arrangement it is envisaged to have direct dispatch of goods

from the factory premises in trucks on placement of orders.

CHAPTER – 5

9
 PRODUCTION CAPACITY AND PRODUCT MIX

5.01 The production capacity of plant & machineries for manufacture of concrete
products namely bricks, hollow blocks and pavers have been recommended by supplier
of machineries and technical consultant of the project on the following considerations.

 Standard size of plant & machineries available indigenously vis-à-vis productivity

and wastage factor.

 Market demand of the products.

 Economic viability of the unit.

 Availability of infrastructural facilities at the work site like power, water, road,

transport & communication facilities.

 The product mix.

5.02 Out of the above factors, product mix plays an important role. In the given
proposal products considered for sale turnover are solid concrete bricks (75mm), hollow
concrete blocks (100mm) & paver blocks – I shape (75mm). From the consideration of
demand aspects in the locality it is decided that out of total working days of 300 in a year
– production of bricks, pavers & hollow blocks will be taken up for 150 days, 50 days &
100 days respectively. This product mix can be changed at any time based on market
demand of the product, profitability and other important factors.

5.03 Optimum production capacity of the plant based one aforesaid production pattern
is worked out in the following manner.

(A) Undersize from boulder crusher to product solid bricks made from cement, sand &
stone dust in specified proportion.
Size : 230mm x 110mm x 75mm
Cycle time : 15 – 20 seconds
Pieces per mould : 7
Pieces per minute : 28
Optimum production per hour = 28 x 60
= 1680
Optimum production for 8 hours = 1680 x 8
= 13440 nos.
Optimum production in 150days = 20,16,000 nos.
(B) Production of paving blocks with the same ingredients as bricks
Size : 200mm x 100mm x 75mm
Cycle time : 50 seconds
10
 Pcs per mould : 10
Production per minute = 60 x 10 / 50 = 12
Optimum production per hour = 12 x 60 = 720
Optimum production per day = 720 x 8 = 5760 no.
Of 8 hours working
Optimum production in 50 days = 5760 x 50
In a year = 288000 nos.

(C) Concrete hollow blocks to be made with the same ingredients as bricks & pavers

Size : 200mm x 400mm x 1600mm

Cycle time : 60 seconds
Pcs per mould : 4
Optimum production per minute = 60 x 4 / 60 = 4 nos.
Optimum production per hour = 4 x 60 = 240 nos.
Optimum production per day (8 hours working) = 1920 nos.
Optimum production of hollow blocks for 100 days = 192000 no.

5.04 The requirement of indigeneous machineries, equipment and accessories which

will be required to achieve projected capacity has been worked out and detailed in
Appendice A3. The project, however, does not contemplate to achieve production at
optimum capacity from the beginning as initially plant will take initially sometime to
overcome teething problems before stabilizing production. Thus it is assumed that the
unit will be able to utilize 60%, 70%, 80% and 90% of optimum capacity in 1st year, 2nd
year, 3rd year and 4th year onwards respectively.

11
 CHAPTER – 6

MANUFACTURING PROCESS

6.01 The process of manufacture of cement concrete bricks, hollow blocks and pavers
involves the following five stages.
i) Proportioning
ii) Mixing
iii) Compacting
iv) Curing
v) Drying
The determination of suitable amounts of raw materials needed to produce
concrete of desired quality under given condition of mixing, placing & curing is known as
proportioning.
Objective of through mixing of aggregate after screening, sand, cement & water is
to ensure that cement water paste completely covers the surface of sand & aggregates.
The purpose of compacting is to fill all air pockets with concrete as a whole
without movement of free water through concrete. Excessive compacting will result in
formation of water pockets or layers will higher water content and poor quality of product.
After removed from moulds products are protected until they are sufficiently
hardened to permit handling without damage and then are cured in a curing yard to
permit complete moisturisation for 21 days minimum by immersing them in water tanks.
Concrete shrinks slightly with loss of moisture. It is therefore essential that after
curing is over products should be allowed to dry out gradually in shade so that the initial
drying shrinkage is completed before they are used in construction work stacking is done
with their cavities horizontal to facilitate through passage of air. Generally a period of 7 to
15 days of drying will bring the materials to the desired degree of dryness.

6.02 Raw materials used in making cement concrete bricks is 60 – 62% stone dust, 30-
32% sand and 8 to 10% OFC cement. While for paver blocks the following ingredients
are used.

Sand 40 to 42% Average 40%

Stone chips 10 to 12% Average 10%
Stone dust 34 to 38% Average 36%
OPC cement 12 to 14% Average 14%
For concrete hollow blocks
Cement : 9%
Sand : 36%

12
 Crushed stone dust : 45%
Stone chips : 10%
6.03 Mixing & grinding of the ingredients in specified proportion is done in PAN
MIXTURE which is specially designed for thorough mixing of stone dust, stone chips &
sand etc. in powder form. Heavy cast iron rollers revolving on bearings with metal seals
are provided in the pan mixture to facilitate grinding of the materials in desired size and
shape by mixing blades made of special alloy steel with hard faced tips. A collection
hopper is provided below the discharge gate of the mixture in order to collect & stock the
mixed material from pan mixture and discharge the required quantity on the belt
conveyor.

6.04 The mixed ground materials is conveyed by the belt conveyor to the automatic
brick/hollow block/paver making machine. The conveyor belt is made of nylon materials
with rubber tips. Power is transmitted from electric motor to conveyor through reduction
gears. In order to prevent ingress of stone dust friction less idlers are provided with seals
on both sides of the conveyor.

6.05 Automatic hydraulically operated machine is a multipurpose machine easy to

operate with high efficiency and low maintenance. It is equipped with an integrated
control panel, pan mixture, conveyor belt, hopper, two no trolleys and belt system
discharge and suitable for casting high density bricks, hollow blocks & pavers. The
machine develops very high compressive force as required to be made for specified time
period to achieve maximum density which make the end products uniform and give high
output at a very economical cost.

Hydraulically operated pallet feeder takes pallet one after another from the pallet
magazine and feed to the top of the vibrating table. Compressed materials are
continuously produced & taken to the curing site where products are cured with water
spray for early strength.

6.06 An automatic cement batching system having motorized screw conveyor with
suitable length to discharge predetermined quantity of cement to the separate cement
weighing hopper is to be installed as an additional equipment which further discharges
the weighted material into the pan mixer.

Also an additional equipment for automatic water dosing system incorporating

auto discharge of predetermined quantity of water into the drum with digital display. A
water pump needs to installed for ease and accuracy of operation.

6.07 Cement concrete bricks, blocks & interlocking pavers have compressed strength
achievable to 90.250 kg/cm sq., water absorption of 6 – 15%, density 1.75 gm/cc. These
are resistant to water sleepage, has heat insulation properties. It has affinity to crystal
growth between brick & cement mortar and highly durable as its strength increases with
time.

13
 CHAPTER – 7

LOCATIONAL ASPECTS

7.01 While selecting the site for the proposed project the following interrelated factors
were considered & carefully evaluated.

 Proximity to the source of raw materials & the market

 Availability of power, water, road, transport facilities.

 Availability of skilled & unskilled labour & their cost.

 General industrial scenario and their potential.

 Availability of workshop & other service facilities close to the site.

 Availability of land & land cost.

 Communication facilities.

 Site characteristics, soil conditions, contour of the site, room for expansion.

 Flood & fire history.

 Regulatory laws.

 Assistance & graded benefits/subsidies from Central/State Government and local

bodies.

7.02 The factor which weighs heavily in favour of selecting the site at XXXXXXXX
under XXXXXXXX Block in XXXXXXXX district of XXXXXXXX is availability of land at
reasonable cost, proximity to raw material source and market.

Raw materials like sand, stone chips & crushed stone dust are available in
abundance in the locality. Few cement factories are also existing at a distance of 100 KM
from the factory site. As there are about 50 stone crushers & a good number of brick
kilns making day bricks in the district availability of skilled & unskilled labour will not pose
any problem.

The unit being located in rural areas of the border district will attract subsidy from
the Central Govt. and a host of graded incentives from the State Government.

14
 CHAPTER – 8

RAW MATERIALS, MACHINERIES, UTILITIES AND PLANT SERVICES

8.01 Raw Materials and Access :-

Raw materials required for production cement concrete bricks, hollow blocks and
pavers are cement, sand & crushed stone dust & stone chips.

While cement & sand can be procured from local suppliers/dealers stone dust &
stone chips are to be purchased directly from stone crushers. There are about 40/50
stone crushers operating in different areas of XXXXXXXXdistricts. Availability of huge
quantity of crushed stone dust generated in crushers is sold at a low price which is a
definite advantage for the project. Sand is also quite cheap here compared to the
different places in the place. Both sand & stone dust are available in abundance in the
locality. There are also few cement factories within a radius of 100 KM of the project
area.

8.02 The promoter of the project will install a multipurpose automatic vibro hydraulic
machine with necessary accessories and auxiliary equipment from the reputed supplier
on turnkey basis for production of cement concrete bricks, hollow blocks & interlocking
pavers. The same machine can also be utilized for production of fly ash bricks, solid
concrete blocks etc. by changing moulds of desired shape & size.

Erection, installation & commissioning of machineries will be done by the

manufacturer cum supplier of the machine. They will also impart training to the operators
for handling & operation of the machine.

8.03 Power and water are the two main utilities. The requirement of electricity is about
5 KW which will be provided by the State Power Distribution Company.

A deep tube well along with necessary equipment like installation of submergible
water pump, water reservoir & overhead water tank will be erected at project site.
Requirement of water will be about 10 KL/day.

8.04 In order to have smooth & trouble free operations it is necessary to execute timely
repair & maintenance work which can be done in a series of trade workshop working
near the project area. Machine supplier will take necessary steps to supply timely
replacement parts and provide after sale service.

Necessary measures will be taken to install fire fighting devices at the vintage
point of the factory although industry of this type is not involve any potential fire hazard.

Necessary steps will be initiated for safe disposal of solid & liquid waste. Proper
drainage system will be constructed at project site for liquid waste disposal safely.

15
 CHAPTER – 9

ORGANISATION & MANNING

9.01 For smooth and efficient operation, the unit will have to qualified, trained and
capable set of staff & workers.

9.02 For making traditional clay brick by brick kiln manpower requirement is very high
as the operations are manual but in making concrete bricks, pavers & blocks operations
are done by automatic machines, this manpower requirement is drastically reduced
which is a definite advantage from the point of view of cost effectiveness & quality
assurance.

9.03 Production manager, an experienced person in the trade will be at the helm of
affairs and will be responsible for day to day working of the unit. He will report to the
promoter of the project daily and appraise him of all the important matters regarding
working of the unit. Under the manager there will be accountant cum cashier, store
keeper, purchase & sale personnel, production supervisor and a host of skilled &
unskilled workers.

9.04 Salary & wages for staff & workers will be fixed in consistency with wage structure
for similar job prevailing locally. Beside monthly salary/wages they will get the benefits of
PF, Gratuity, medical aids, incentives, bonus etc.

9.05 The manning pattern for the unit has been proposed on the basis of

a) Single shift of 8 hours working for 300 working days in a year.

b) Extra provision will be included for sickness, absenteeism etc.

9.06 Availability of manpower at reasonable cost will not pose problems as adequate
number of trained persons are available in the region in view of a large number of
traditional brick fields & stone crushers are existing here since long.

16
 CHAPTER – 10

FINANCIAL IMPLICATIONS & ECONOMIC VIABILITY

10.01 Cost of the Project

The capital cost of the project has been estimated on the basis of unit having
installed capacity of the plant for production of 20,16,000 no of cement concrete bricks,
2,88,000 of paver blocks and 1,92,000 no. of hollow blocks on single shift of working for
300 working days in a year. Out of 300 working days in a year, production of bricks,
pavers & hollow blocks of specified dimensions & shape will be taken up for 150 days, 50
days and 100 days respectively.

The capital cost of the project including margin money for working capital for one
cycle of operation is Rs. 25.00 lakhs as detailed in Annexure ‘A’.

10.02 Means of Financing

Source of finance will be mainly raised from Promoter’s contribution of Rs. 1.25
lakhs at the rate of 5% of the capital expenditure, subsidy from the Govt. under PMEGP
of Rs. 8.75 lakhs at the rate of 35% of the project cost & remaining 60% of the project
cost amounting to Rs. 15.00 lakhs will be financed by Bank/Financial Institution as term
loan on normal lending terms for SSI. Bank will initially finance 95% of the project cost.
Subsidy amount will be routed through bank when released, by the Nodal Agency of the
scheme, KVIC or DICC which will be adjusted against term loan.

Debt equity ratio has been worked out to 1.86 : 1, subsidy amount being
considered as per of equity.

Beside subsidy on capital expenditure of the project, the unit is eligible for
recurring subsidy/incentives eg. Stamp duty, GST, interest on working capital loan,
power tariff, captive power installation, incentive for employment generation etc. from the
State Government. The unit being located in border district in southern XXXXXXXX and
the entrepreneur is first generation entrepreneur. The beneficiary is a technical
entrepreneur having rich professional experience in the country & abroad. He belongs to
OBC category. He has not availed benefits of the scheme under any other scheme.

10.03 Land, Site Preparation, Building & Civil Works

The entrepreneur has taken on lease rent basis land measuring about 29000 sq.ft.
at Budirail. Land is already developed and site preparation work is more or less
completed. Ready built work shed taken on rental basis covering about 100 sq.m. built
up area will accommodate plant & machineries and other miscellaneous assets/utilities.

17
10.04 Plant, Machineries & Utilities
Promoter of the project has selected automatic hydraulically operated concrete
brick, paver & hollow blocks making machine along with required accessories. The
machine has flexibility and can suitably change over for fly ash bricks also.
Since power requirement will exceed 20 KW the promoter will buy one 63 KVA
Transformer. Erection of Transformer, providing service connection & commissioning of
the Transformer will be done by XXXXXXXX Power Distribution Company (formerly
XXXXXXXX State Electricity Board).
A deep tube well along with water pump, water reservoir & overhead water
storage tank will be installed to meet uninterrupted supply of water requirement by the
unit.
10.05 Miscellaneous Fixed Assets
Under this head items included are furniture, fixtures, equipment, movable tools &
appliances etc. as shown in Appendice A4.
10.06 Contingency & Cost Escalation
To provide against price rise of major assets due to inflation during
implementation period a small amount of fund as percentage of the cost of the assets
has been provided.
10.07 Preliminary and Preoperative Expenses
The expenditure on this head has been detailed in Appendice A6. The main
ingredient of cost is payment of interest on Term Loan disbursed during preoperation
period.
10.08 Margin Money for working capital
Margin money for working capital has been estimated on the basis being made
available as working capital to the extent of 75% of working capital requirement for the
project. Yearwise working capital required is estimated based on utilization of installed
plant capacity.
10.09 On the basis of production programme and utilization of optimum plant capacity as
envisaged, estimate of profitability has been worked out in Annexure ‘D’. As indicated the
project will earn profit right from 1st year of operation and will improve over the years as
percentage of plant capacity utilization would go up gradually.
10.10 Principal raw materials as sand, cement, stone dust & stone chips are available
locally in abundance at reasonable cost. Details about cost of raw materials & other
consumables, annual production & sale as epr product mix followed by sales realization
have been presented in Appendice D1 & D2.
10.11 Depreciation of assets has been calculated both by straight line as well as WDV
method.
18
10.12 Interest on term loan at the rate of 11.5% per annum & on working capital loan at
the rate of 14% per annum have been calculated and annexed to the report.
10.13 Financial analysis of the project shows that all the important financial indicator
depict a healthy & sound liquidity position of the project like Break Even Capacity at
66.40%, Payback period of 2 years 6 months, Debt Service Coverage Ratio if 4.31, Debt
Equity Ratio of 1.5:1 against norm of 3:1, Internal Rate of Return at 42%.
As reflected in Cash Flow Statement the unit will generate sufficient surplus as as
to meet easily all the working expenses of the unit including loan repayment obligations
fully. The project is economically viable, technically feasible and financially favourable.

19
 CHAPTER – 11

PROJECT IMPLEMENTATION SCHEDULE

11.01 A preliminary project implementation programme has been presented which

involves mainly the following actions.
• Collection of site data including soil testing.
• Engineering of civil works.
• Arrangement of shed, foundation of machines and structures.
• Arrangement of water supply.
• Arrangement of power supply.
• Placement of order for machineries, equipment & accessories, their receipt
at site and erection, electrification, testing and trial runs.
• Finally commissioning of the unit for commercial production.

11.02 Time schedule for each element of major activities involving implementation
schedule of the unit has been drawn & presented below.
All efforts will be directed for timely completion of the project. It will take 6 to 8
months to complete implementation of the project & start running production on
commercial scale. Day to day progress of work regarding implementation schedule of the
project will be monitored to avoid over running of time & cost budget.

IMPLEMENTATION SCHEDULE

Sl. Activities Commencement Completion of

of Work Work
1. Acquisition of land for the project -- Already
acquired on
lease rent
2 Site preparation & construction of rental Work has already been
workshed & other civil works as commenced
construction of foundation for machineries
3 Confirming purchase order and placement 0 month 2nd month
of order for complete set of machineries &
other miscellaneous assets
4 Delivery of machineries & other assets as 2nd month 4th month
ordered at site
5 Erection, electrification & installation of 4th month 5th month
machineries

20
6 Procurement of 63 KVA Transformer and 2nd month 5th month
its installation and providing service
connections to machineries & other points
as necessary
7 Arrangement of water as erection of deep 2nd month 4th month
tube well, installation of submergible pump,
pipeline & fitting, construction of water
reservoir & overhead water tank
8 Trial run of machineries (empty run) 5nd month 6th month
9 Procurement of raw materials & 6th month 6th month
consumables
10 Trial run of machineries 6th month 7th month
11 Commencement of production on 7th month onwards
commercial scale

21
 ANNEXURE – A

CAPITAL COST OF THE PROJECT

Sl. Item Particulars Cost

(Rs. in lakhs)
1 Land measuring about 29600 sq.ft. at XXXXXXXX, XXXXXXXX Leasehold
Kathal Road
2 Building and civil works including site preparation Rental
Working shed having covered area of 110 sq.m. to
accommodate plant, machineries & other miscellaneous assets

3 Plant & machineries 15.50

4 Utilities 5.01

5 Miscellaneous fixed assets 0.55

6 Preliminary & preoperative expenses 0.65

7 Contingency & cost escalation provision 0.64

8 Margin money for working capital (one cycle of operation) 2.65

Total Capital Cost of the Project 25.00

22
 ANNEXURE – B

MEANS OF FINANCING PATTERN

(Rs.in lakhs)

Sl.No. Item Particulars Amount

1. Promoter’s Contribution towards capital expenditure 1.25
2. Subsidy under PMEGP 8.75
3. Term Loan from bank/financial institution 15.00
Total 25.00

a) Debt Equity Ratio = 15.00

10.00
= 1.5 : 1

b) Initially bank is to provide to the extent of 95% of project cost, the amount being
Rs. 23.75 lakhs as term loan. Subsidy amount when released by the Government
through Nodal Agency will be routed through Bank & adjusted against term loan.

23
 ANNEXURE – C

ESTIMATE OF WORKING CAPITAL

(Rs.in lakhs)

Sl. Item Particulars Norms/Stock Margin Total Margin Bank

Period Required Working Money borrowing
Capital

1 Raw materials & 3 days 25% 2.13 0.53 1.60

consumables

2 Materials in process 1 day 25% 0.74 0.18 0.56

3 Finished goods 2 days 25% 1.52 0.38 1.14

4 Bills Receivable 6 days 25% 4.66 1.16 3.50

5 Operating Expenses One month 100% 1.30 1.30 --

Total 10.35 3.55 6.80

AT OTHER CAPACITY UTILISATION LEVEL

(Rs.in lakhs)

Year % of Utilisation Total Working Margin Money Bank Borrowing

of installed Capital
capacity requirement
1st 60 6.73 2.65 4.08
nd
2 70 7.63 2.88 4.75
rd
3 80 8.54 3.10 5.44
th
4 & onwards 90 9.44 3.33 6.11

24
 ANNEXURE – D

ESTIMATE OF COST, PERFORMANCE & PROFITABILITY

(Rs.in lakhs)

Sl. Item Particulars Y E A R

st nd
1 yr. 2 yr. 3rd yr. th
4 yr. th
5 yr. 6th yr. 7th yr.
A Annual Sale Turnover at Installed Plant 287.00 287.00 287.00 287.00 287.00 287.00 287.00
Capacity
% Utilisation of Capacity 60 70 80 90 90 90 90
Annual production & sale realization at 172.20 200.90 229.60 258.30 258.30 258.30 258.30
respective utilization level
B Cost of Operation
Raw materials & consumables 141.70 165.30 188.95 212.50 212.50 212.50 212.50
Salary & wages 15.26 15.26 15.26 15.26 15.26 15.26 15.26
Utilities 0.90 1.05 1.20 1.35 1.35 1.35 1.35
Repair & maintenance 0.79 0.79 0.79 1.13 1.13 1.13 1.13
Administrative, selling & other overhead 7.46 8.65 9.98 11.45 11.45 11.45 11.45
costs
Depreciation 3.21 3.21 3.21 3.21 3.21 3.21 3.21
Total Cost of Operation 169.32 194.26 219.39 244.90 244.90 244.90 244.90
C Gross Profit before tax & interest 2.88 6.64 10.21 13.40 13.40 13.40 13.40
D Interest on Loan
On Term Loan 1.72 1.51 1.23 0.94 0.65 0.37 0.08
On Working Capital Loan 0.57 0.67 0.76 0.86 0.86 0.86 0.86
E Net Profit before tax 0.59 4.46 8.22 11.60 11.89 12.17 12.46
F Income Tax payment NIL NIL NIL - - - -
G Net Profit after interest & tax 0.59 4.46 8.22 11.60 11.85 12.17 12.46

25
 ANNEXURE – E

TERM LOAN REPAYMENT SCHEDULE

(Rs.in lakhs)

TERM LOAN : Rs. 15.00 lakhs

Repayment Period : 7 years

Moratorium period for instalment of term loan : 1 year

Year Installment of loan Cumulative loan Balance Outstanding

repayment

1st Nil Nil 15.00

2nd 2.50 2.50 12.50

3rd 2.50 5.00 10.00

4th 2.50 7.50 7.50

5th 2.50 10.00 5.00

6th 2.50 12.50 2.50

7th 2.50 15.00 ---

26
 ANNEXURE – F

PROJECT CASH FLOW STATEMENT

(Rs.in lakhs)

Sl. Item Particulars Construction Y E A R

Period 1st yr. 2nd yr. 3rd yr. 4th yr. 5th yr. 6th yr. 7th yr.
A Sources of Fund
(Cash Inflow)
Promoter’s contribution 1.25 - - - - - - -
Govt. Subsidy 8.75 - - - - - - -
Long term loan 15.00 - - - - - - -
Borrowing of working capital - 4.08 0.67 0.69 0.67 - - -
Gross profit before interest and tax - 2.88 6.64 10.21 13.40 13.40 13.40 13.40
Depreciation - 3.21 3.21 3.21 3.21 3.21 3.21 3.21
TOTAL 25.00 10.17 10.52 14.11 17.28 16.61 16.61 16.61
B Utilisation of Fund
(Cash Outflow)
Capital Expenditure 22.35 - - - - - - -
Increase in Current Assets - 5.43 0.90 0.91 0.90 - - -
Repayment of Term Loan - - 2.50 2.50 2.50 2.50 2.50 2.50
Payment of Interest
On Term Loan - 1.72 1.51 1.23 0.94 0.65 0.37 0.08
Drawings - - 1.00 1.50 2.00 2.50 3.00 3.50
TOTAL 22.35 7.15 5.91 6.14 6.34 5.65 5.87 6.08
Opening Balance NIL 2.65 5.61 10.24 18.21 29.15 40.11 50.85
Surplus 2.65 3.02 4.63 7.97 10.94 10.96 10.74 10.53
Closing Fund 2.65 5.67 10.24 18.21 29.15 40.11 50.85 61.38

27
 ANNEXURE – G

PROJECTED BALANCE SHEET

(Rs.in lakhs)

Sl. Item Particulars Y E A R

1st yr. 2nd yr. 3rd yr. 4th yr. 5th yr. 6th yr. 7th yr.
A Capital & Liabilities
Promoter’s Contribution 1.25 1.25 1.25 1.25 1.25 1.25 1.25
Subsidy 8.75 8.75 8.75 8.75 8.75 8.75 8.75
Reserve & Surplus
Profit & loss account 0.59 5.05 13.27 24.87 36.72 48.89 61.35
Secured Loan
Long Term Loan 15.00 12.50 10.00 7.50 5.00 2.50 --
Working Capital borrowing 4.08 4.75 5.44 6.11 6.11 6.11 6.11
Total Liabilities 29.63 32.30 38.71 48.48 57.83 67.50 77.46
B Assets
Gross Fixed Assets 22.35 22.35 22.35 22.35 22.35 22.35 22.35
Less : Annual Depreciation 3.21 6.42 9.63 12.84 16.05 19.26 22.47
Net Fixed Assets 19.14 15.93 12.72 9.51 6.30 3.09 Nil
Current Assets
Stocks & Book Debts 4.82 5.13 5.28 5.32 5.32 4.56 3.58
Cash & Bank Balance 5.67 10.24 18.21 29.15 40.21 50.85 61.38
Drawings - 1.00 2.50 4.50 6.00 9.00 12.50
Total Assets 29.63 32.30 38.71 48.48 57.83 67.50 77.46

28
 ANNEXURE – H

BREAK EVEN CAPACITY ANALYSIS

Basis : 4th Year of Operation

Production : 90% of installed plant capacity

(Rs.in lakhs)

A Sale Revenue : 258.30

B Variable Cost

Raw materials & consumables 212.50

Utilities 1.13

Selling Expenses 7.74

Total costs 221.37

C Contribution = 258.30 – 221.37 = 36.93

D Fixed Costs

Lease rent for land & shed 3.00

Salary & Wages 15.26

Administrative & other overhead Cost 3.71

Repair & Maintenance 1.13

Interest on Term Loan 0.94

Depreciation 3.21

Total Fixed Cost 27.25

Break Even Capacity = 27.25 x 90

36.93 x 100
= 66.40%

29
 ANNEXURE – I

PAY BACK PERIOD

(Rs.in lakhs)

Year Net Profit Depreciation Interest on Cash Inflow Cumulative

Term Loan Inflow

1st 0.59 3.21 1.72 5.52 5.52

2nd 4.46 3.21 1.51 9.81 15.33

3rd 8.22 3.21 1.23 12.64 27.97

4th 11.60 3.21 0.94 16.04 44.01

5th 11.89 3.21 0.65 16.03 60.04

6th 12.17 3.21 0.37 16.04 66.08

7th 12.46 3.21 0.08 15.75 81.83

Pay Back Period = 2 years + (27.97 – 22.35) x 12

12.64

= 2 year 6 months

30
 ANNEXURE – J

DEBT SERVICE COVERAGE RATIO

(Rs.in lakhs)

Sl. Item Particulars 1st 2nd 3rd 4th 5th 6th 7th

A Net Profit 0.59 4.46 8.22 11.60 11.89 12.17 12.46

Depreciation 3.21 3.21 3.21 3.21 3.21 3.21 3.21

Interest on Term Loan 1.72 1.51 1.23 0.94 0.65 0.37 0.08

Total 5.52 9.18 12.66 15.75 15.75 15.75 15.75

B Interest on Term Loan 1.72 1.51 1.23 0.94 0.65 0.37 0.08

Installment of Term Loan - 2.50 2.50 2.50 2.50 2.50 2.50

Total 1.72 4.01 3.73 3.44 3.15 2.87 2.58

C Debt Service Coverage Ratio 3.20 2.28 3.39 4.57 5.15 5.48 6.10

Average DSCR = 4.31

31
 ANNEXURE – K

INTERNAL RATE OF RETURN

(Rs.in lakhs)

Sl. Item Particulars Preoperation 1st year 2nd year 3rd year 4th year 5th year 6th year 7th year
Period

1 Total cash outflow (-) 22.35 - - - - - - -

2 Total cash inflow - 5.52 9.18 12.66 15.75 15.75 15.75 15.75

3 Net cash receipt (-) 22.35 (+) 5.52 (+) 9.18 (+) 12.66 (+) 15.75 (+) 15.75 (+) 15.75 (+) 15.75

4 Present value discounted @ (-) 22.35 3.88 4.55 4.42 3.87 2.60 1.81 1.22
42%

Total Cash Outflow : (-) 22.35

Total Cash Receipt : (+) 22.35

@ 42% value discounted annually

Internal Rate of Return = 42%

32
 APPENDICE – A1

LAND, LAND DEVELOPMENT & SITE PREPARATION

The promoter has acquired land at XXXXXXXX on XXXXXXXX Kathal road

measuring about 30000 sq.ft. on long lease at the rent of Rs. 50000/- per annum for the
purpose of setting up the proposed project. Land is suitable & developed.

APPENDICE – A2

BUILDING AND CIVIL WORKS

An open shed having covered area of 200 sq.m. having length of 20M, breadth 10M
& height 4.5M would be taken on rental basis. Construction of the shed is likely to be
commenced soon.

Shed to be constructed will have iron posts, beams, pucca floor, CI sheet roofing
supported on (steel) tubular trusses.

33
 APPENDICE – A3

PLANT, MACHINERIES & UTILITIES

(Rs. in lakhs)
Sl. Item Particulars Quantity Cost
1 Brick/paver/hollow block making multipurpose automatic
machine equipped with an integrated control panel
complete with conveyor belts, pan mixer suitable for
casting sand, stone dust & cement for bricks & hollow
blocks & pavers made of stone chips sand and cement in
appropriate proportion. Motors – 5 HP for hydraulically 1 no. 8.25
operated main machine, 7.5 HP motor for pan mixture and
2 HP motor for colour mixture
2 Moulds with lamping heads
For hollow blocks 4 nos. 1.00
For pavers 3 nos. 1.20
3 Vibrotable having 2000 sq.ft. capacity fitted with 3 HP 1.00
motor
4 Automatic water dozing system incorporating auto 0.45
discharge of predetermined quantity of water into the drum
with digital display and electrically operated pump
Total Cost 11.90
Add : GST @18% on machineries cost 2.14
Add : Freight, insurance (in transit), packing, forwarding, handling cost 0.86
Add : Installation cost along with cost for civil works of foundation of 0.60
machine @5% of machine cost
Total Cost of Plant, Machineries & Utilities 15.50
4 UTILITIES AND PLANT SERVICES
Purchase of a 63 KVA transformer, erection/installation & transformer, 4.21
providing service connection to machineries & other sections including
cost of security money
Erection of a deep tube well for water supply and installation of 0.80
submergible pump, pipe, fitting, water reservoir & overhead tank etc.
Total Cost of Plant, Machineries & Utilities 5.01

Total Cost of Plant, Machinery and Utilities is Rs. 20,51,000.00

34
 APPENDICE – A4

MISCELLANEOUS FIXED ASSETS

Sl. Item Particulars Cost

(Rs. in lakhs)
1 Installation of lights, fans, air circulators, exhaust fans etc. 0.12
2 Furniture, fixtures, fittings etc. 0.15
3 Laboratory appliances for routine testing 0.18
4 Fire fighting equipment at vintage points 0.10
Total 0.55

Cost of Miscellaneous Fixed Assets = Rs. 55,000.00

APPENDICE – A5

CONTINGENCY & COST ESCALATION

(Rs. in lakhs)
Sl. Item Particulars Original Provision for Amount
Cost contingency
and cost
escalation

1 Plant, machineries & utilities 20.51 3% 0.62

2 Miscellaneous fixed assets 0.55 4% 0.03
Total 21.06 0.65

35
 APPENDICE – A6

PRELIMINARY & PREOPERATIVE EXPENSES

Sl. Item Particulars Cost

(Rs. in lakhs)

1 Preparation of Project Report 0.12

2 Travelling expenses in preoperation period 0.11

3 Cost of stationary, Xerox, telephone, fax, email etc. in 0.03

preoperation period

4 Mortgage & legal expenses 0.04

5 Licence & processing fees 0.05

6 Insurance during construction period 0.04

7 Interest on Term Loan disbursed in construction period 0.25

TOTAL COST 0.64

Preliminary & Preoperative Expenses = Rs. 64,000.00

36
 APPENDICE – D1

ESTIMATE OF PRODUCTION AND SALE

(Rs. In lakhs)
Sl. Item Particulars Annual Production Unit Rate Total Sale
No. and Sale Realisation

1 Solid cement concrete 23,00,000 7/- per piece 161.00

Bricks (75mm)
2 Cement concrete interlocking 2,88,000 10/- per piece 28.80
Paver blocks (75mm)
3 Cement concrete hollow 3,60,000 27/- per piece 97.20
Blocks (200mm)
TOTAL 287.00

AT OTHER CAPACITY UTILISATION LEVEL

(Rs. In lakhs)

YEAR UTILISATION LEVEL (%) ANNUAL SALE

REALISATION
1st 60 172.20
2nd 70 200.90
3rd 80 229.60
4th & onwards 90 258.30

37
 APPENDICE – D2

RAW MATERIALS AND CONSUMABLES

(A) Requirement of Raw Materials for bricks

Average weight of cement concrete brick = 2.70 kg
Weight of 1000 bricks = 2700 kg
Requirement of raw materials :
Cement : 9%
Sand : 36%
Crushed stone dust : 55%
Cost of raw materials for 1000 bricks
Sand required (36%) = 972.0 kg
Crushed stone dust (55%) = 1485.0 kg
Cement (9%) = 243.0 kg
For 1000 bricks production
Cost of sand at the rate of Rs. 0.96 per kg = Rs. 933.00
Cost of crushed stone dust at the rate of 1.20 per kg = Rs. 1782.00
Cost of OPC cement at the rate of Rs. 9.10 per kg = Rs. 2211.00
= Rs. 4926.00
(B) Requirement of Raw Materials for pavers
Average weight of one paver block = 3.30 kg
Weight of 1000 paver blocks = 3300 kg
Raw materials required for 1000 pavers & their cost
Stone aggregate (10% = 330 kg
Stone dust (37%) = 1221.0 kg
Sand (42%) = 1386 kg
OPC cement (11%) = 363.0 kg
Stone aggregate at the rate of Rs. 11.50 per kg = Rs. 3795.00
Sand at the rate of Rs. 0.96 per kg = Rs. 1330.00
Crushed stone dust at the rate of Rs. 1.20 per kg = Rs. 1465.20
OPC cement at the rate of Rs. 9.10 per kg = Rs. 3303.30
= Rs. 9893.50
(C) Requirement of Raw Materials for 1000 hollow blocks production
OPC cement : 9%
Crushed stone dust : 40%
Sand : 41%
Stone chips : 10%
Average weight of a hollow block = 9.0 kg
Weight of 1000 blocks = 9000 kg
For 1000 blocks requirement of
OPC cement = 810.0 kg
Crush stone dust = 3600.0 kg
Sand = 3690.0 kg
Stone chips = 900.0 kg

38
 Cost of 1000 no. hollow block production
Cost of cement @ Rs. 9.10 per kg = Rs. 7371.00
Cost of crushed stone dust @ Rs. 1.20 per kg = Rs. 4320.00
Cost of sand @ Rs. 0.96 per kg = Rs. 3542.00
Cost of stone aggregate @ Rs. 11.50 per kg = Rs. 10350.00
= Rs. 25583.00

REQUIREMENT OF RAW MATERIALS AND COST

Sl.No. Item Particulars Cost of Raw Materials

1 For cement concrete bricks 23,00,000 nos. 113.30
At the rate of Rs. 4926.00 for 1000 bricks

2 For interlocking cement concrete pavers –

2,88,000 28.49
At the rate of Rs. 9893.50 per 1000 no.

3 For cement concrete hollow blocks at the rate

Of Rs. 25583.00 per 1000 nos. 92.09
Raw materials cost for 360000 blocks

4 Consumables & tools @ 0.01% of raw materials cost 2.30

TOTAL COST 236.18

AT OTHER UTILISATION LEVEL OF OPTIMUM PLANT CAPACITY

YEAR % OF UTILISATION COST OF RAW MATERIALS

CONSUMABLES & TOOLS

1st 60 141.70
2nd 70 165.30
rd
3 80 188.95
4th & onwards 90 212.50

39
 APPENDICE – D3

MANPOWER REQUIREMENT AND EMPLOYMENT COST

Sl. Designation No. of Salary/Wages Total Salary/

Persons Per month Wages per
month
1 Production Manager 1 10000.00 10000.00
2 Accountant cum Cashier 1 8000.00 8000.00
3 Store keeper cum purchase 1 7000.00 7000.00
assistant
4 Salesman 2 5000.00 10000.00
5 Clerk cum computer 1 5000.00 5000.00
programmer/ typist
6 Skilled workers 2 7000.00 14000.00
7 Semi skilled workers 3 5000.00 15000.00
8 Unskilled workers 5 4000.00 20000.00
9 Fitter cum electrician 1 7000.00 7000.00
10 Security Guard 2 5000.00 10000.00
TOTAL 19 106000.00

Total monthly salary/wages = Rs. 1,06,000.00

Total Annual Salary/Wages = Rs. 12,72,000.00
Add : 20% of PF, Medical aid, incentives,
Bonus etc. = Rs. 2,54,400.00
Total Annual Emoluments = Rs. 15,26,000.00

40
 APPENDICE – D4

COST OF UTILITIES

A Power requirement = 25 KW

(a) Consumption of power (electricity) per annum

= 25 x 0.70 (LF) x 0.60 (Diversion factor) x 6 x 300
= 18900 units
At the rate of Rs. 5/- tariff per unit for rural area
Cost of Power per annum = 18900 x Rs. 5/-
= Rs. 94500.00
(b) Cost of Lubricant PA = Rs. 25000.00
(c) Cost of water services
per annum = Rs. 31000.00

Total cost of utilities per annum = Rs. 1,50,500.00

AT OTHER UTILISATION LEVEL

(Rs. In lakhs)

YEAR UTILISATION LEVEL % COST PER ANNUM

st
1 60 0.90
2nd 70 1.05
rd
3 80 1.20
th
4 & onwards 90 1.35

41
 APPENDICE – D5

COST OF REPAIR & MAINTENANCE

(Rs.in lakhs)

Sl. Item particulars Original Provision for Repair Amount

Cost & Maintenance as %
of original cost
1 to 3rd
st
4th to 7th 1st to 3rd 4th to 7th
year year year year
1 Plant & machineries 15.50 3.5% 5% 0.55 0.78
2 Utilities 5.01 4% 6% 0.21 0.31
3 Miscellaneous fixed 0.55 4% 7% 0.03 0.04
assets
Total 21.06 0.79 1.13

42
 APPENDICE – D6

ADMINISTRATIVE, SELLING AND OTHER OVERHEAD COSTS

(Rs. In lakhs)

Sl. Item particulars Y E A R

st nd rd
1 yr. 2 yr. 3 yr. 4th yr.
1 Printing, stationery, Xerox, 0.25 0.30 0.36 0.42
telephone, fax, email, postal
expenses etc.

2 Travelling & conveyance 0.40 0.45 0.55 0.64

3 Professional fees, audit fees, 0.30 0.32 0.38 0.45

legal expenses etc.

4 Tax, duty & insurance 0.55 0.60 0.67 0.75

5 Various licence & processing 0.10 0.12 0.15 0.20

fees

6 Advertisement & publicity 0.40 0.47 0.55 0.70

7 Selling expenses @ 3% of 5.16 6.03 6.88 7.74

sale turnover including
commission of selling agents

8 Miscellaneous office 0.30 0.36 0.44 0.55

expenses

Total Expenses 7.46 8.65 9.98 11.45

43
 APPENDICE – D7

INTEREST ON LOAN

A TERM LOAN : Rs. 15.00 lakhs

Rate of Interest : 11.5% PA
(Rs.in lakhs)

Year Installment Balance Interest Amount

Outstanding
1st 1st half Nil 15.00 0.86
1.72
2nd half Nil 15.00 0.86
2nd 1st half 1.25 13.75 0.79
1.51
2nd half 1.25 12.50 0.72
3rd 1st half 1.25 11.25 0.65
1.23
2nd half 1.25 10.00 0.58
4th 1st half 1.25 8.75 0.50
0.94
2nd half 1.25 7.50 0.44
5th 1st half 1.25 6.25 0.36
0.65
2nd half 1.25 5.00 0.29
6th 1st half 1.25 3.75 0.22
0.37
2nd half 1.25 2.50 0.15
7th 1st half 1.25 1.25 0.08
0.08
2nd half 1.25 Nil --

B Loan on Working Capital loan

Interest rate : 14% PA
(Rs.in lakhs)
Year Working Capital Interest Amount
Borrowing @ 14% PA
1st year 4.08 0.57
2nd year 4.75 0.67
3rd year 5.44 0.76
4th year & onwards 6.11 0.86

44
 APPENDICE – D8

CALCULATION OF DEPRECIATION OF ASSETS

(Rs.in lakhs)

A By Straight Line Method

Sl Item Particulars Rate of Original 1st yr 2nd yr 3rd yr 4th yr 5th yr 6th yr 7th yr
Dep. Cos

1 Plant & 15% 15.50 2.33 2.33 2.33 2.33 2.33 2.33 2.33
machineries

2 Utilities 15% 5.01 0.77 0.77 0.77 0.77 0.77 0.77 0.77

3 Misc. fixed assets 20% 0.55 0.11 0.11 0.11 0.11 0.11 0.11 0.11

Total 21.06 3.21 3.21 3.21 3.21 3.21 3.21 3.21

B By WDV Method

Sl Item Particulars Rate of Original 1st yr 2nd yr 3rd yr 4th yr 5th yr 6th yr 7th yr
Dep. Cost

1 Plant & 30% 15.50 4.65 3.25 2.28 1.60 1.12 0.78 0.55
machineries

2 Utilities 30% 5.01 1.50 1.35 0.95 0.66 0.47 0.33 0.23

3 Misc. fixed assets 20% 0.55 0.11 0.09 0.07 0.06 0.05 0.04 0.03

Total 21.06 6.26 4.69 3.30 2.32 1.64 1.15 0.81

45